Who Reaches for the Golden Handshake

Abstract

Downsizing. The word has a fearful ring, both to those whose jobs are in jeopardy and to those who must make the decision to push others out of the corporation. To soften the blow of workforce reductions, especially when they involve management employees, companies frequently offer a financial incentive or "golden handshake" to volunteers willing to terminate their employment ahead of schedule. This has been particularly effective for those nearing retirement, who can claim their pension and an additional payout. The golden handshake offer often takes the form of a bonus payment, which may be supplemented by a change in pension requirements, resulting in a larger pension. (For example, a company may give the employee credit for more years than he or she actually worked.) Observing the departure of managers reaching for such golden handshake offers, an executive may wonder, "What have I done? Have I lost my best managers?" At the same time, colleagues may wonder, "What will become of them? Will they regret it? Should I do the same thing?" Some answers to these questions come from a longitudinal study begun in the 1950s of Bell System managers. Participants in the study were followed intensively until the mid-1980s, by which time a significant number had taken an early retirement. Those who left with golden handshake offers were compared to other early retirees, and all who retired early were compared to an equivalent group who remained active on the company payroll. Also explored was whether it was possible to predict which managers were most likely to retire early. Data collected periodically over their managerial careers reveal that the retirees differed from the actives in terms of their work motivations and attitudes, their financial concerns, and their values and interests. A final consideration is the reactions of the early retirees to the circumstances of their departures and to their lives in retirement. These various analyses have led to recommendations for companies' using golden handshake offers.